Peso closes P44.83 to $1

The Philippine peso closed on a stronger note on Wednesday, following the pledge made by the new chairman of the United States Federal Reserve in maintaining the central bank’s monetary policy.

The local currency closed at P44.83 to $1 on Wednesday, appreciating 23 centavos from the P45.06 level the previous day.

An analyst said that the stronger peso can be attributed to the upbeat outlook of US Fed Chairman Janet Yellen to the US economy, and the portfolio flows to the Philippine stock market.

In her first testimony since taking the Fed chairmanship on February 1, Yellen said that the US economy is expected to grow this year and next at a moderate pace, despite some recent poor data that has sparked fears of a slowdown.

Yellen told the US Congress that she expects to continue predecessor Ben Bernanke’s plan to gradually wind down the bond-buying scheme and keep interest rates low until there was a significant improvement in the jobs market, which she said was still shaky.

The Fed earlier decided to taper its bond-buying program by another $10 billion, to $65 billion a month beginning February on the account of continued confidence on the US economic recovery.

The Fed agreed to a second tapering, following on a December 18 decision to cut its monthly asset purchases to $75 billion a month in January from an original $85 billion a month.

For its part, the Bangko Sentral ng Pilipinas said that, “As expected, Fed Chair Yellen emphasized the principles of continuity of policy, of being data-dependent, of not having a pre-set course on policy.”

“This means the markets will be well-served if they are circumspect and if they also watch how the economic data unfold,” BSP Governor Amando Tetangco Jr. said in a text message.

Meanwhile, the dollar was mostly lower against Asia-Pacific currencies. It weakened to Sg$1.2656 from Sg$1.2688 on Tuesday, to 12,105 Indonesian rupiah from 12,163 rupiah, to 62.15 Indian rupees from 62.39 rupees.

It also eased to 32.68 Thai baht from 32.79 baht, and to 1,062.95 South Korean won from 1,070.89 won.